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Reverse Mortgage: It Ain’t the Same as it Used to Be

by | Jan 25, 2019 | Uncategorized | 18,091 comments

Reverse Mortgage: It Ain’t the Same as it Used to Be

The Good and Bad of Living Long

I have lived long enough to witness ebbs and flows in culture, economic twists and turns, and a plethora of changes in human behavior regarding personal finances.  That can be good and bad. The bad part usually revolves around our distaste for change. The good part relates to brainstorming an optimal result, based upon the circumstances at hand.

Oh boy, does that sound like pontification?  Let me explain.

Back in the ’60s, ’70s and early ’80s, while I was advising clients as a C.P.A., I always discouraged my clients from taking a Reverse Mortgage on their home.  R.M.’s were sort of a dirty word. There were many reasons, not the least of which was that charlatans gravitated to this industry to prey upon unsuspecting senior citizens. Another reason for the resistance to this form of home financing was the overwhelming mindset that equity in the old homestead was sacred and must be left to the children.  This was considered a noble gesture, maybe a right of passage.

In 1987 the world of Reverse Mortgages was turned on its ear.  The Reagan Administration passed legislation that made most Reverse Mortgages subject to FHA rules and protocols.  The oversight by the federal government ran off the bad guys and set some strict guidelines to protect one of the most vulnerable segments of our society, our seniors.  

There are a few of the Silent Generation left, however, most of our seniors are Baby Boomers.  I am one myself.

Baby Boomers will be sequentially reaching retirement age for the next 15 years or so.  

The Boomers have a very different attitude toward their home equity than their parents. The Boomers have been spenders since they were able to coerce their parents into purchasing newer, better and often unnecessary toys.  Well, as the saying goes, “The only difference between men and boys is the price of their toys.” Spend, spend, spend!

Ironically, the Boomers bought homes and although they refinanced them periodically to have cash to buy more things, they still in many cases have substantial equity in their homes.  

The issue, with regard to Baby Boomers, in particular, is they don’t have sufficient cash flow to live a comfortable life.  They did not save and invest in order to be prepared for retirement. Take a look at this picture. No cash flow and lots of equity in their home.

Um…  What should we do?  More and more seniors recognize the benefit of a Reverse Mortgage as a safe way to solve their cash flow needs.  Oh, today I rarely have any prospective client balk at not having maximum amounts of equity to leave to their offspring.  Most of the children do not have enough disposable income to help their parents with living expenses, either. Consequently, a Reverse Mortgage may be just the ticket to solve the financial challenges of our senior citizens.

CALL ME FOR A FREE CONSULTATION TO DETERMINE IF A REVERSE MORTGAGE MAY BE OPTIMAL FOR YOU, YOUR FAMILY AND FRIENDS

MIKE KIRKLAND
(909) 273-5556 / (760) 407-6740
jmkirkland1@gmail.com

BRE#: 01723180
NMLS#: 1205678

HOME FINANCING, INC.
NMLS#: 60506

 

 

This article's featured Photo is courtesy of Josh Edgoose on Unsplash

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